The overall effect of the Caribbean Basin Economic Recovery Act (CBERA) on the U.S. economy generally, and U.S. import, industries, and consumers continues to be negligible, while the effect on beneficiary countries is small but positive, reports the U.S. International Trade Commission (USITC) in its publication Caribbean Basin Economic Recovery Act: Impact on U.S. Industries and Consumers and on Beneficiary Countries, Twenty-fourth Report, 2017-18.
The USITC, an independent, nonpartisan, factfinding federal agency, recently issued its 24th biennial report monitoring U.S. imports under CBERA. The CBERA program, operative since January 1, 1984, affords preferential tariff treatment to most products of the 17 designated Caribbean countries that received CBERA benefits during the period covered in the report.
The latest USITC report covers the impact of CBERA, as modified by the Caribbean Basin Trade Partnership Act of 2000 (CBTPA), and the HOPE and HELP Acts, on the United States, with particular emphasis on calendar year 2018. CBERA requires the USITC to prepare a biennial report assessing both the actual and the probable future effect of CBERA on the U.S. economy generally, on U.S. industries, and on U.S. consumers. The report also covers the impact of the preference program on the beneficiary countries. The following are highlights from the latest report.
- The overall effect of CBERA imports on the U.S. economy generally and on U.S. imports, industries, and consumers continued to be negligible in 2018. For U.S. industries in particular, the overall effect of the program on domestic production, employment, and operating profits was also negligible. The USITC identified two U.S. industries -- methanol and t-shirts -- that most likely have faced negative effects due to competition from CBERA imports.
- U.S. imports receiving preferential treatment under CBERA totaled $1.7 billion in 2018, an increase of 9.1 percent from $1.5 billion in 2017. The value of U.S. imports under CBERA declined between 2012 and 2016, but increased in both 2017 and 2018. The change was driven primarily by increasing imports of two products: methanol from Trinidad and Tobago, and apparel from Haiti. Petroleum-related products accounted for 29.9 percent of imports under CBERA in 2018, with Trinidad and Tobago’s methanol supplying 89 percent of such imports. Textiles and apparel, supplied mainly by Haiti, accounted for 56 percent of U.S. imports under CBERA in 2018, with cotton T-shirts supplying 30.1 percent of those imports. The remaining imports were agricultural products and other mining and manufactured products, comprising 7.9 percent and 6.2 percent of imports under CBERA, respectively.
- Special CBERA provisions for Haiti have had a strong, positive effect on export earnings and job creation in Haiti's apparel sector. Apparel assembly is Haiti's largest manufacturing activity and the country's largest source of manufacturing jobs. CBERA -- enhanced by CBTPA and the HOPE and HELP Acts -- has been an important factor in promoting apparel production in Haiti and apparel exports to the U.S. market.
CBERA has encouraged several beneficiary countries to develop niche exports to the United States, including polystyrene from The Bahamas, fruits and fruit juices from Belize, and electronic products from St. Kitts and Nevis.
- Investment for the near-term production and export of CBERA-eligible products is expected to have negligible impact on U.S. competitive industries as well as on the U.S. economy.
- Exporting CBERA-eligible goods is a challenge for many CBERA beneficiaries because of supply-side constraints, including inadequate infrastructure and an increasing focus on the export of services.
- The future effect of CBERA on the U.S. economy and domestic industries will likely remain small. CBERA countries generally are, and are likely to remain in the near term, small suppliers to the U.S. market. Most of the effect of CBERA on the U.S. economy occurred shortly after the program’s implementation in 1984, as well as after implementation of each major enhancement to CBERA.
Caribbean Basin Economic Recovery Act: Impact on U.S. Industries and Consumers and on Beneficiary Countries, Twenty-fourth Report, 2017-18 (Inv. No. 332-227, USITC Publication 4985, September 2019) is available at https://www.usitc.gov/publications/332/pub4985.pdf.
USITC general factfinding investigations, such as this one, cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the House Committee on Ways and Means, or the Senate Committee on Finance. The resulting reports convey the Commission's objective findings and independent analyses on the subjects investigated. The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the USITC submits its findings and analyses to the requestor. General factfinding investigation reports are subsequently released to the public, unless they are classified by the requestor for national security reasons.